Reborn Coffee, Inc. (REBN) - Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. Reborn Coffee, Inc. operates as a smaller reporting company with two primary segments: Reborn Coffee (retail and wholesale coffee operations) and Reborn Logistics (freight forwarding and logistics services). The company operates retail locations in California, South Korea, and Malaysia. As of May 22, 2026, there were 8,213,455 shares of common stock outstanding.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Net Revenues | $5,211,447 | $1,693,261 |
| Net Loss (GAAP) | $(1,493,240) | $(2,191,144) |
| Net Loss Attributable to Shareholders | $(1,827,569) | $(2,191,144) |
| Cash and Cash Equivalents | $266,382 | $2,594,716 (Dec 31, 2025) |
| Net Cash Used in Operating Activities | $(362,250) | $(464,606) |
| Total Liabilities | $10,706,261 | $8,535,225 |
| Convertible Debt (Net) | $3,665,069 | $3,266,467 |
Material Changes vs. Prior Period
- Revenue Surge: Total revenue increased by 207.8% to $5.2 million. This was driven almost entirely by the new Reborn Logistics segment, which generated $3.39 million in service income (65% of total revenue) compared to zero in the prior year.
- Store Performance: Traditional store revenue declined by 12.4% to $1.47 million, while wholesale/online revenue grew 457.5% to $79,869.
- Expense Growth: Total operating expenses rose 79.4% to $6.1 million. This includes $2.59 million in subcontractor costs for logistics and a $292,589 stock compensation expense (non-existent in Q1 2025).
- Loss Reduction: Despite higher expenses, the net loss attributable to shareholders decreased by 16.6% year-over-year, primarily due to the revenue contribution from logistics offsetting operational costs.
- Liquidity Decline: Cash and cash equivalents dropped significantly from $2.59 million at year-end 2025 to $266,382 at March 31, 2026, due to a $3.28 million net cash outflow from investing activities (primarily loans to related parties).
Outlook, Risks, and Contingencies
- Going Concern Warning: The filing explicitly states that the company's accumulated deficit of $32.5 million and recurring losses raise substantial doubt about its ability to continue as a going concern. Additional financing is required to fund operations.
- Capital Raising: On April 29, 2026, the company entered into a Securities Purchase Agreement for a private placement of up to $21 million in common stock. The first closing ($2.8 million) is pending Nasdaq approval; the second closing ($18.2 million) requires stockholder approval.
- Debt Restructuring: On April 15, 2026, an Amended and Restated Forbearance Agreement was signed with Arena Investors regarding $4.17 million in convertible debentures. The company agreed to monthly payments of $400,000 starting May 30, 2026, with full repayment due by September 30, 2026.
- Internal Controls: Management concluded that disclosure controls and procedures were ineffective as of March 31, 2026, citing material weaknesses due to inadequate accounting resources and lack of segregation of duties.
Investor Verification Checklist
- Cash Runway: Verify the sufficiency of the $266k cash balance against the $400k monthly debt service obligation starting May 2026.
- Financing Closure: Confirm the status of the $21 million private placement and Nasdaq listing approvals, as these are critical for solvency.
- Related Party Transactions: Review the $4.9 million loan receivable from a related party and $1.05 million accounts payable to a related party for terms and collectibility.
- Logistics Margins: Assess the sustainability of the Reborn Logistics segment, which generated $3.4M revenue but $2.6M in subcontractor costs (approx. 76% cost of revenue).
- Internal Controls: Evaluate the remediation plan for the identified material weaknesses in financial reporting.